Is the HAMP Loan Modification Program Really a Failure?

December 8th, 2010 by Joe Kriesberg

As the foreclosure crisis grinds on month after month and year after year, it is hard to find any news to feel good about. Even the recent dip in foreclosure petitions in October was probably due more to the confusion and delays caused by the apparent failure of banks and servicers to process foreclosures in a legal manner rather than any real shift in the market. Foreclosure deeds in 2010 already exceed the number of deeds in 2009 and continued high unemployment and tight credit are likely to cause this crisis to continue for a long time.

And it is now an old story that banks and servicers are not agreeing to loan modifications at anywhere near the rate we need to stabilize the market, keep homeowners and tenants in their homes, and avoid further neighborhood decline.

Despite this, recent federal statistics indicate that 10,535 Massachusetts homeowners obtained a permanent loan modification under the federal HAMP program between January 1, 2010 and October 31, 2010, and a total of 12,154 Massachusetts homeowners have received one since the program began in 2009.  While 12,154 is far too few compared to the 40,686 homeowners who have been foreclosed since 2007 and the 20,603 who have been foreclosed since 2009, it is still 12,154 families who have kept their homes. (The number is probably a bit lower since about 11% of these modifications re-default.)  Significantly, 10,535 homeowners have received a modification during 2010 compared with 11,334 homeowners who have lost their home to foreclosure.

In other words, without HAMP, the problem would be nearly twice as bad this year. Clearly, HAMP is by far the largest scale program yet developed to prevent foreclosures. MACDC members and other non profits continue to use HAMP to help thousands of homeowners avoid foreclosure and stay in their homes.  With all the challenges associated with loan modifications, foreclosure prevention counseling remains the fastest and most cost effective method for stopping foreclosures, preserving family wealth, avoiding displacement, and stabilizing neighborhoods.

Fortunately, these non profits will soon benefit from additional resources to support their vital work. The Division of Banks has issued an RFP  to provide additional funding to these nonprofit agencies under a program established by legislation MACDC helped enact in 2007. Also, Morgan Stanley will soon make available $2 million in new funding based on an Agreement signed with Attorney General Coakley as a result of Morgan Stanley’s involvement in subprime lending. MACDC and CHAPA are working with the AG and Morgan Stanley to ensure that this funding is released in early 2011.

I wish the banks would modify more loans and I wish the federal government would put more pressure on the banks to do so. In the meantime, however, let’s recognize that high quality foreclosure counseling by non profits have combined with the HAMP program to save 12,154 homeowners in our state. We can be proud of that.

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Am I an environmentalist or a community developer?

December 8th, 2010 by Joe Kriesberg

In 1993, when I was finishing law school I was considering many career options and decided that I wanted to shift from my prior work in the clean energy field and tackle issues of racism and poverty more directly by working in community development. I was making an intentional and significant shift from one field to another. Years later, when I was looking to hire a new MACDC staff person I had several candidates apply for the job who were employed by environmental organizations. I finally asked one why he wanted to make the shift. His answer was to say that he did not see community development as a new field at all – it was all the same field!

It was an “aha” moment that forced me to rethink my assumptions and definitions. It also was a moment when I realized that the leaders of the future often see connections and similarities where some in the past would have seen barriers and differences.

The reality that community development and environmental sustainability are part of the same movement was on clear display at a session hosted last week by the Mel King Institute’s Community Development Innovation Forum.

At the event, MACDC’s Don Bianchi presented the findings of our new report “Community Development Goes Green: How MACDC Members are Embracing Environmental Sustainability.” The report found that 65 MACDC member organizations are engaged in at least one activity or project that explicitly advances environmental sustainability. We also heard about some examples, including including Franklin County CDC’s   efforts to promote local agriculture, Urban Edge’s green community education work, Homeowner’s Rehab’s work to retrofit existing apartment buildings (including one where they reduced energy usage by 69%) and the Neighborhood of Affordable Housing (NOAH)’s environmental justice campaigns to clean up contaminated land and engage young people in environmental action. We also heard from Tapper Carew who is working with Mel King and the South End Technology Center to train young people on new solar and transportation technologies.

The presentations were truly inspiring.

I then moderated a panel with John Kassel from Conservation Law Foundation, Mariella Tan Puerto from the Barr Foundation and Madeline Fraser Cook from LISC’s Green Development Center. They shared their observations about the work that CDCs are doing and suggested opportunities for taking it to the next level.  Some of their key points:

  • Collect, track and report energy and environmental impacts with data;
  • With climate legislation dead in Congress, position community development as a key element of the Nation’s “Plan B” for addressing climate change;
  • Recognize that community development is inherently green because urban livability is essential to stopping sprawl; and
  • Focus on advocacy at both the local level and the state level, including issues that CDCs might not traditionally tackle.

For me the event symbolized how things can come full circle. In 1993, I thought I had to choose between being either an environmental advocate or a community developer. As we approach 2011, I am pleased that “either/or” has become “both/and.”

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